Flagging returns prompt surge in manager scrutiny
GLOBAL - Dissatisfied institutional investors launched a spate of managerial reviews as returns flagged during the first half of 2009, research from bfinance revealed.
In a survey of 63 plans across Europe and North America, the independent financial consultant found 62% had either reviewed their managers or put them on a "watchlist" for 21% of their assets under management on average.
And while an average of just 7% of assets under management have been switched to date, bfinance managing director, head of research and development Olivier Cassin said he expected this figure to increase in 2010 as reviews were completed.
Cassin said: "The situation last year was different to anything we'd experienced before, which is why so many investors launched reviews of their underperforming managers. A lot of these reviews won't be finalised until later this year, so I'd expect this figure to rise in 2010."
The survey also revealed a renewed appetite for risk as low interest rates limited investment options.
Some 27% said they would increase their exposure to the previously beleaguered property market over the next six months.
The first half of 2010 should also see a boost for commodities and private equity and equities, with 16% expecting to increase their target allocation to the former and 21% to the latter.
bfinance chief executive David Varfai said: "Back in October 2008 when we conducted the first survey, we saw that there appeared to be disenchantment with diversification and active management.
"We saw the pendulum start to swing back last spring with investors planning to increase their equity allocation and now we can see the momentum continue with investors actively seeking diversification in alternative asset classes."
However, enthusiasm for hedge funds looks set to wane in the first half 2010, with just 8% of investors expecting to increase their exposure.
Interest in fixed income assets is also expected to decline, with 42% saying they will seek to decrease their exposure in the next six months.
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